QUESTION
Do I have to pay my chapter 13 bankruptcy plan all the way out or can I pay it off early to finish it up?
Asked on Nov 17th, 2014 on Bankruptcy - California
More details to this question:
Do I have to pay my chapter 13 bankruptcy plan all the way out or can I pay the total amount of payments off early and be done with the bankruptcy and move on? Thanks.
9 ANSWERS
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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If you suddenly have enough money to pay off the plan payments early, the trustee will probably want to increase your payments to reflect your new earnings or assets. Most people in a Chapter 13 don't pay 100% to their unsecured, non priority creditors (like credit cards). If you had a large increase in income or a inheritance, that money belongs to your creditors not to you.
Answered on Nov 24th, 2014 at 5:41 PM
Derek W. Freeman
Your monthly payment in a chapter 13 plan is supposed to represent your disposable income. In other words, you shouldn't have any extra money to add to your monthly payment unless you've had an increase in income. If you had a change in income, you need to report that to your trustee, and then make an amendment to your payment plan to account for the extra income. Your bankruptcy plan will end when all of your debts are paid off.
Answered on Nov 19th, 2014 at 4:07 PM
Bankruptcy Attorney serving Walnut Creek, CA
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Alan E. Ramos Law Offices
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In the Northern District of California, if you want to end your Chapter 13 early, you must pay 100% of your debt. Otherwise, you must complete your plan as confirmed. If you are not in the Northern District of California, you should consult a local attorney.
Answered on Nov 18th, 2014 at 4:54 PM
Normally you can not prepay your Chapter 13 (i.e., pay it off early). If you are without counsel, I would pay an experienced BK lawyer to review your file and advise you. Better safe then sorry.
Answered on Nov 18th, 2014 at 4:53 PM
Bankruptcy Attorney serving Madison, WI
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Richard B. Jacobson & Associates, LLC
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Here's the problem in trying to pay off a Ch. 13 early. The law requires you to pay into the plan 'all your disposable income' for the period of the Plan which can generally be either 36 or 60 months. So if you receive a windfall, and try to pay off your plan in advance, at least some Trustees will tell you may not do so, but they will happy to take the windfall AND ALSO the monthly Plan payments. BUT, if your windfall will pay off all creditors' claims at 100%, then you should be able to pay it off early. By all creditors' claims, I mean the total of their claims as of the time you filed the BR petition not the percentage of their claims which the Ch. 13 Plan will pay out. It's always a good idea to retain an experienced lawyer in bankruptcy (and most other) cases.
Answered on Nov 18th, 2014 at 3:41 PM
Unless you pay all the claims filed in your Chapter 13, you cannot pay off your Chapter 13 early.
Answered on Nov 18th, 2014 at 3:40 PM
Bankruptcy Attorney serving Livonia, MI
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Charles J. Schneider, P.C.
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It is unwise to pay it off early because you are committed to pay your creditors for a length of time as well as an amount whichever is greater.
Answered on Nov 18th, 2014 at 2:27 PM
You can pay earlier but usually you need to stay in it a third of the time.
Answered on Nov 18th, 2014 at 2:27 PM
Consumer Bankruptcy Attorney serving Los Angeles, CA
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Orantes Law Firm
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It depends. If your case is one of the few that pays 100% of the unsecured claims that were filed, it may not matter if you pay early. Otherwise, you should consult an expert.
Answered on Nov 18th, 2014 at 2:25 PM